To coupon or not to coupon for your online store?

Welcome to the latest installment of our E-Commerce Checklist series. Previous posts have focused on what you can do to your online store to improve conversion and traffic, including creating awesome product pages and optimizing your design and layout. We have a couple more posts in the hopper that tackle on-site improvements, but I wanted to take a break to focus on driving traffic externally since we get a lot of questions about that. Coupons are a great place to start.

There are a lot of debates about whether and how online stores should offer coupons. They can help increase awareness, traffic and sales, but many merchants worry about them negatively impacting the bottom line.

Types of coupons to try

Not all coupons will work for all types of online stores. I recommend trying out a few different kinds to see what moves the needle for you, then refine the offers as you go. Of course, it’s important to carefully look at your profit margins in order to come up with an offer that you can afford to make. After all, the point of a coupon is to ultimately increase your sales. Price appropriately for your margins and then test away!

Free shipping

This is one of the most popular options out there with merchants and customers alike. As shipping is one of the biggest pain points for online consumers (remember: 44% of carts are abandoned because of shipping costs), it makes sense to address it in the form of a handy coupon. If you’re worried you may end up paying too much shipping yourself, or if you tend to sell larger items and picking up the shipping is cost prohibitive, you can still offer free shipping by limiting it to certain order amounts, like “Free shipping on orders $99 and over”. It’s also a great way to increase your average order size.

Flat amount off

Another standard is a flat dollar amount off an order total, like “$10 off your next order”. This tends to convert best if your store has an average order total of less than $100.

Percentage off

The “10% off your next order” type of coupon generally does better for stores with an average order total above $100. Consumers don’t perceive as much of a value for a percentage off lower order totals.

Minimum purchase

If you’re scared of discounting the way I’m scared of clowns (vague sense of terror), tying a minimum purchase amount to your offer is a good way to ease into the wonderful world of coupons. Something like “Get $5 off your next order of $30 or more” acts as a security blanket, guaranteeing you a certain profit level. If tested and tweaked a little, the minimum purchase amount can also entice customers to add more to their carts. But it’s important not to go overboard with that strategy. Try starting with your average order total as the minimum amount and combine it with a discount you can live with, then go from there.

Buy X, get Y

Also known as “The Old Tit for Tat” (not really), this is another good way to dip a toe into couponing, because you’re assuring yourself of a certain order total before the discount. Whether it’s “Buy 2, get 1 free” or “Buy 4, get 10% off”, the pricing of the items involved is key. It’s a good idea to test it on a certain item or category, unless you happen to sell a bunch of different styles of the same basic item.

Loyalty coupons

Once you’ve been in business a while, hopefully you’ll have a list of people who know you, your products, and your level of service: your previous customers. Because a lot of the hard work is already done for you (they know who you are and what you do), sometimes all they need is a little coaxing to become repeat customers.

Try emailing anyone who has purchased from you in the past with a special offer. Any of the coupon types above would work; just make sure you spell out that it’s because they bought from you in the past, like “Exclusive offer: Returning customers get 20% off”. Regularly sending deals to those who have supported you in the past is also an easy way to build loyalty.

Another way of doing this is the referral coupon: offer your customers one coupon code, and in the same email give them another code that they can pass on to a friend. If they like you and your products, hopefully you’ll get two initial sales and another regular customer out of the deal.

Daily coupons

For the couponphobic, offering a coupon good for one day only is another way to limit your exposure. It also creates a greater sense of urgency and lends itself well to promoting through social media (more on that in a bit). Some sites offer a different deal each day. While it can be a bit of a hassle to manually update promotions, apps like Daily Deal Bar can help. Or you can try doing weekly instead of daily deals.

Holiday-based deals

Certain holidays like Labor Day and Memorial Day are associated with sales, while others like Christmas see a ton more online shopping traffic and a promotion can help you stand out. These are the times shoppers expect and are seeking out deals, so try any or all of the above ideas to see what works best during certain holidays. You can also get a little fun and/or cheeseball with your promotions during these times, like offering 17.76% off for Independence Day or giving a discount on Christmas presents for fathers using the coupon code feliznaviDAD. I just made that one up — feel free to use it!

Pre-launch coupons

If you’re launching a new online store, promote it to a select list of people before you officially open, and offer them a coupon to become one of your first customers. This can help build loyalty early on, plus acts as a good trial run for your store.

Evangelist coupons

Find the people in your space that have large social media followings or are active on other online platforms and give them special coupons with significant discounts. The idea is to get them to try your product. If they like it, hopefully they’ll tell their followers all about you and the amazing stuff you sell. You probably already know of a few people with influence in your market, but you can also use tools like Klout or Traackr to find key online influencers.

Promotion

Sure you can hire a skywriter or pay a dude to tattoo your offer and logo on his bald head, but there are three basic, easy ways to get the word out about a deal you’re offering.

Email

Tried and true, email should be your go-to method for disseminating coupons. Keep them short and sweet, putting the focus on the offer and the coupon code. The subject line is incredibly important, as that’s the main driver of open rates. You want to communicate that there’s a fabulous offer inside, but words like “free” and “% off” can either trigger spam filters or simply decrease opens. MailChimp has some solid advice on subject lines.

Social Media

As long as you’re not limiting a coupon to a select group, social media is another way to raise awareness of an offer and drive some traffic. And it’s free! Unlike email subject lines, copy for a Tweet or Facebook post should say exactly what the deal is, and if possible any exclusions or other relevant details.

One method to try is to offer an exclusive deal to your followers and fans, like “Exclusively for our Facebook fans: 20% off any order this week” (just make sure it’s actually exclusive; i.e., don’t email or put the code on your site). It’s another way of building loyalty and repeat business, plus people like the idea of exclusivity. That’s why yacht clubs are so popular (I hear).

In-Store

If you want to open up the discount to anyone that wanders by your online store or remind shoppers about a regular promotion, featuring it on your site is the way to go. If you have a homepage carousel, that makes a perfect place for a large, eye-catching promo graphic. Otherwise you can try banner ads in various places around your site or even a chic, modern promo strip in the header.

No matter how you display it, the graphic should clearly state the deal and provide the promo code and instructions: “Save 25% on any order! Enter promo code MEGASAVE at checkout.” If you have a landing page or category associated with the deal, the graphic should link to it and be clearly clickable (including a button or underlined link text helps). And of course the graphic should be easily seen by anyone who looks on the page.

Here are a couple of examples I like:

Both link to a category page that includes all on-sale items. The first promo really catches the eye with a high-contrast background color and large type, while the second places a focus on the offer, includes an end date to add a sense of urgency, features a product shot and loves America.

Other things to keep in mind

Keep the offer simple: the more complex the offer, the harder it is to communicate and understand. Stick to the basics outlined above, especially if you’re just starting out.

Keep the coupon code simple: You want something that’s easy to read, remember and type. Use actual words/phrases, keep it under 10 characters (preferably 6), and try to avoid using lookalike characters if you mix in numbers (the dreaded “Is that a 0 or an O?” conundrum). If at all possible, don’t make codes case sensitive.

Including is easier than excluding: That sounds like a Sesame Street lesson, but what I really mean is that it’s easier to offer a sitewide discount or deal than it is to limit it to one category or item. Plus the more you limit the deal, the more you limit your potential pool of takers. It can make sense to restrict discounts by item, etc. but just give it some thought first.

Use a landing page: If you do decide to limit to a category or set of items, it’s a much better experience to land shoppers on a page that shows all the eligible products. Not forcing people to hunt around for them will improve your conversion.

Add an expiration date: Expiring coupons within a reasonable amount of time not only makes it easier to track the results, but creates a sense of urgency for shoppers. Make sure you communicate the expiration clearly.

I hope this post helped ease the minds of any couponphobics out there and gave you a few ideas of how to try them in your own business. Future E-Commerce Checklist posts will discuss checkout optimization and SEO, plus more marketing strategies. Happy discounting, everybody!

David Callaway creates and edits content for Bigcommerce marketing and the platform itself. He is a writer of words, sharer of ecommerce wisdom and digital high-fiver of Bigcommerce clients. He is also very tall.